The 15-day deadline to evaluate the regulation proposed by the Treasury Department for cryptocurrencies ends today, while the rejection in the crypto community continues due to the desire to impose these regulations and the FinCEN is discussing a reform to the Bank Secrecy Act to include foreign cryptocurrency accounts under the regulations.
El Treasury Department and its attached office, United States Financial Crimes Enforcement Network (FinCEN), intend to impose strict regulations on the crypto industry, which due to its great importance require a deep analysis and should not be taken hastily. A few days ago, Treasury Secretary Steven Mnuchin made public his proposed law on transactions made with cryptocurrencies, from or to Wallets self-hosted, with which it intends to impose new daily margins and require stricter KYC (Know Your Customer) rules for this type of transactions.
Although it is a proposal, the Secretary only gave a 15-day period, which expires today, January 4, for crypto industry participants to evaluate the new rule and issue their comments on it. In addition, this comment period conveniently coincided with the Christmas and New Year holidays, something that has caused numerous criticisms from the industry, and even from many legislators and congressmen, for the lack of sufficient time to analyze and evaluate the new proposals.
Now, FinCEN, the entity through which the Treasury seeks to impose its new law, also intends to presentar a proposal for reform of the Banking Secrecy Law, with which it pursues a new objective: to include in the Report of Foreign Bank and Financial Accounts (FBAR) cryptocurrency and digital asset accounts held abroad, so that citizens must report to the entity all financial transactions they make with and from said accounts.
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BitGo and Congressmen join protest against Treasury regulation
BitGo CEO, Brian Davenport, took to social media to express his rejection of the new regulations that the Treasury is seeking to impose on cryptocurrency transactions. Davenport defends the right to financial privacy of millions of American citizens, which will be at serious risk if the new law is approved, which is considered a direct violation of this fundamental right of society.
Likewise, knowing the history of the Treasury Department, and other US agencies, which have been victims of major hacks, the company's CEO argues that the new law will also put the security of citizens at risk; since the databases managed by the Treasury, with the personal and private information of cryptocurrency users, could be subject to theft and cyberattacks by hackers who will look for alternatives to steal the funds of said users. Davenport senses that a situation similar to that experienced by Ledger users will occur, who receive thousands of fake messages, phishing attacks and other threats a day, which put their cryptocurrency funds at risk; a situation that originated due to a leak of personal data from the company a few months ago.
“Creating a centralized repository of individuals who own cryptocurrency puts them at enormous risk, and far from reducing crime, holds the potential to create a wave of violent crime never before seen.”
Thus, in his letter, Davenport expresses that far from favoring the development of the crypto industry, the new regulatory proposals of the Treasury Department will harm the industry and development of the country in the new digital era, in addition to motivating crime and offenses, and risking the privacy and security of the country's citizens.
US Congress outraged by Treasury proposal
For their part, several US congressmen signed a letter addressed to Mnuchin on December 31, to express his outrage at the short time that this agency gave for the evaluation of his regulatory proposal.
In this letter, the congressmen Warren Davidson, David Schweikert, Tom Emmer, Darren Soto, Tulsi Gabbard, Ted Budd y Bill Foster, Most members of the Blockchain Caucus, in addition to Senator Tom Cotton and the president of the New Democrats Coalition, Susan DelBene, claim that the Treasury only gave a period of 8 business days to evaluate the rule, since the rest of the days in the 15-day period were holidays. Thus, the congressmen advocate for the reconsideration and extension of this period to the normal period to approve a regulation, which is 60 days, pointing out that a period of 8 business days is not appropriate to decide the approval of any regulation within any industry.
“This is a very complex rule, as attested by the 24 questions FinCEN asks in the notice. It is impossible for the public to provide meaningful comment in such short time, and such a rushed process threatens the legitimacy of this rule. It also makes new regulations highly susceptible to challenges.”
The congressmen's letter also asks the Treasury to extend the application of this rule, if approved, to a minimum period of 6 months, so that interested parties can develop technological solutions that allow them to comply with the requirements and demands of this proposed law.
More FinCEN regulations
In addition to the tension that the crypto community is experiencing over the Treasury's proposed bill on self-custody wallets, FinCEN is also considering introducing an amendment to the Bank Secrecy Act, which would include foreign cryptocurrency accounts within US regulations. With its new reform proposal, FinCEN seeks to make cryptocurrency accounts, which are held with institutions abroad, a type of reportable account in the United States, included in the report of foreign bank and financial accounts (FBAR). In this way, the authorities will be able to require US citizens to report their cryptocurrency holdings in foreign accounts if they exceed the threshold of $10.000 USD.
“At this time, a foreign account holding virtual currency is not reportable on the FBAR… However, FinCEN intends to propose an amendment to the Bank Secrecy Act (BSA) implementing regulations relating to FBAR reporting to include virtual currency as a type of reportable account.”
Representatives of the crypto community continue to insist that comments must be submitted to the Treasury to express rejection of the hasty approval of the new regulatory proposals.
Bitcoin on the rise and attempts to regulate the crypto market
The Treasury Department notes that the new regulations seek to ensure the national security of the United States by minimizing the risks of money laundering and the financing of terrorist activities through cryptocurrencies. However, they are also a direct violation of the financial privacy rights of citizens who hold funds or savings in cryptocurrencies such as Bitcoin, which is becoming for many a reserve asset of value and protection against the devaluation of fiat money; as well as an effective method to escape the interference and intervention of the US government, and other governments.
The president of the NGO Bitcoin Argentina, Rodolfo Andragnes, noted that all those who choose to invest in Bitcoin 500 million or 1.000 million dollars “It is because they know how to keep bitcoins out of the reach of any State”. Likewise, several financial institutions are calling Bitcoin the money of the 21st century due to its characteristics and properties, which will also continue to make the value of this cryptocurrency grow in the future, in the medium and long term.
At press time, Bitcoin has once again broken new all-time highs, and its value is hovering between $34.000 USD and $34.500 USD per unit, making it one of the highest-yielding cryptocurrencies in the ecosystem and most attractive to retail and institutional investors. However, this bullish rally is also attracting the attention of regulators, and although 2021 is just beginning and there is still much to see, the excessive regulations sought by the Treasury and FinCEN may end up slowing down the incredible and exceptional growth of this asset in the markets.
Continue reading: The Treasury Department presents its proposed law for the cryptocurrency industry
